Pleasantville maintains an appropriations ledger for police department supplies. The amount appropriated for supplies was $100,000. The ledger shows that two purchase orders were placed, PO A for $35,000 and PO B for $28,000. The supplies ordered on PO B arrived and were accepted; the invoice was for $28,000. At that point, how much of the appropriation was available for spending?

Question

Quizplus · Accepted Answer

When a government gives formal accounting recognition to the cost of a purchase order, it records an encumbrance equal to the purchase order amount. This reduces the net available appropriation by $63,000. Even though the supplies ordered in PO B have been converted to expenditures, both amounts still reduce the available appropriation balance.

Pleasantville Maintains an Appropriations Ledger for Police Department Supplies